How high-performing startups keep their teams patient, energized and focused on the long term.

1. LIFE HAPPENS
1
How high-performing startups keep their teams patient,
energized and focused on the long term.

2. Via secondary stock sales
which are standardizing as
an employee retention tool
2

3. $3.6B+
Source: NASDAQ Private Market. 2014-1H’16
Aggregate Volume of Secondary Stock Sales Transacted
on Nasdaq Private Market
3

4. 53%/47%
$2.1B
$363M
Source: NASDAQ Private Market. 2014-1H’16
# of Deals
4
Avg Deal Size
Avg # of Sellers
Company vs. Third Party Buyers
Avg Company Valuation
Avg Company Funding
82
$43.9M
113

5. Mostly by Employees Selling Common Shares
Source: NASDAQ Private Market, 2014-1H’16
1%
5

6. Among Mature Software/Consumer Companies
Ave=8 Ave=436
Source: NASDAQ Private Market, 2014-1H’16
13-15
16+
1% 1% 3%
4%
6

7. Why are companies
increasingly organizing
aligned liquidity programs?
7

8. Source: SVB (Dr. Jay Ritter, Univ. of Florida, U.S. Unicorns)
Seeking Flexibility to IPO on Their Timing
8

9. Source: HackerLife
While Retaining Their Most Valuable Asset
9
Average Tenure of Engineers

10. 10
As Deeper Pockets Try to Poach Their Team
Source: The Information

11. Staying private longer
allows companies to make the
business even stronger
11

12. Growing Revenue is Primary Motivation
Source: Andreessen Horowitz (Jay Ritter, Univ. of Florida) 12

13. Source: Andreessen Horowitz (Capital IQ)
While Accruing Value in It’s Private Life
13

14. Median Return: -28%
IPO Date: 2014 2015 2016
And Ensuring They Don’t Suffer
the Post-IPO Fate
Source: SVB (Capital IQ) 14

15. Which has ushered in the
Private IPO (PIPO)
15

16. PIPOs Exceeding IPOs
Source: SVB (CB Insights, S&P Capital IQ)
0
16
Private Financings Where the Funds Raised is Equivalent to Public Funds Raised

17. $1B+ PIPOs Exceeding $1B+ IPOs
Source: Pitchbook 17

18. TotalRounds
AverageRoundSize
Primarily Funded by Crossover Publics
Source: SVB (CBInsights) 18

19. Secondaries Increasing Along with PIPOs
Sources: NASDAQ Private Market, Renaissance Capital, CB Insights 19
Secondary Tx Volume$ # of Secondary Tx’s # of Tech IPOs
20152014201320122011
60
50
40
30
20
10
0
$1800
$1600
$140
$1200
$1000
$800
$600
$400
$200
$0
$SecondaryVolume(mm)
#ofTransactions

20. Resulting in a Decline Across All Exits
Source: Pitchbook 20

21. Which is the backdrop to
the vaunted Unicorn
21

22. 148 Members of the Billion Dollar Club
Source: CB Insights 22

23. Private Companies with Reported $1B+ Valuations:
Q1’14 – Q2‘16
Unicorn Market Value Concentration:
June 2016
Concentrated Among Consumer Companies
Source: SVB (Wall Street Journal) 23

24. Year End
Unicorns
2013
Exits New Year End
Unicorns
2015
Year End
Unicorns
2014
Exits New Exits New June End
Unicorns
2016
Unicorns Entering Faster Than Exiting
Source: SVB (Wall Street Journal; S&P Capital IQ) 24

25. Unicorns are only a slice
of the startup population
eligible for
secondary stock sales
25

26. 472
Source: Founders Circle Capital 26
Number of companies that could be public based upon today’s business performance,
but are electing to stay private (148 of whom are Unicorns).

27. Companies are facilitating
secondaries for their
employees to help them
solve for their life’s needs
and reenergize them for the
good work that lies ahead
27

28. 28